Australia would benefit more than China from the free trade agreement shows the trading relationship between the two nations and the extent of trade barriers. China has stringent trade restrictions than Australia. The trading dynamics are such that China is a more significant trading partner to Australia than the other way. It was strategically the right time to sign the agreement for Australia as China is new to bilateral FTA’s. It would not be in China’s broader interest to put its signature on a FTA which would be perceived as one-sided and greedy by the others. Australia is the part of the broader international picture and it would be in the interest of China to sign a fair agreement despite if it is a tough one.
Since, the negotiations went on for a decade; it seemed once that both the parties have lost interest. But once New Zealand successfully concluded the FTA with China, the Australian companies got a kick that they would be at a disadvantage compared to their Kiwi counterparts. Australia’s merchandising exports to China had grown at a considerable rate which could have increased if a FTA was in place.
Australian exporters from various sectors like agriculture, pharmaceutical and manufacturing would benefit widely from the tariff reductions. The Australian owned companies would benefit from the access to services market of China which would open new opportunities in telecommunications, insurance and banking. The ChAFTA would encourage Chinese investment into Australia. The thresholds of the approval from FIRB would be significantly increased in the areas which are not sensitive sectors for Chinese private investments.
In general, Free Trade Agreement creates and facilitates healthy competition in the open market engendering business to continuously focus on innovations. Free Trade Agreement facilitates developing better quality products for the consumers, helps provide more employment opportunities, opens up new markets for the products and also encourages increase in saving as well as increase in investment (Bhagwati, J. N., 1993). Free Trade Agreement would enable more as well as better quality goods and services reach consumers at comparable prices, which further help enhance the standard of living of the society. Free trade also helps create a free environment for business and trade. The Australia-China Free Trade Agreement would providemutual benefits and gains to both the countries.